SB 1224 Life Settlement Regulation
Proposed Life Settlement licensing and regulation in California.
SB 1224 enacts the Life Settlement Consumer Protection Act of 2008 in the State of California which does the following:
1) Prohibits STOLIs in California by providing that beneficiaries that do not have an insurable interest in the life of the insured violate existing insurable interest laws. STOLI is defined as “an act, practice, or arrangement to initiate the issuance of a life insurance policy in this state for the benefit of a third-party investor who, at the time of the policy origination, has no insurable interest in the life of the insured.” Additionally, there must be an arrangement or agreement to directly or indirectly transfer the ownership of the policy to a third party.
2) Revises the license requirement for a life agent licensed by the Department of Insurance (DOI). Existing life agents must notify the Department within 10 days if they intend to participate in life settlement contracts.
3) Requires other persons who are not currently licensed as brokers, agents or providers to apply for a certificate as a securities broker-dealer in order to engage as an agent of an issuer of viatical or life settlement securities.
4) Requires life settlement brokers and providers to provide specified disclosures to life insurance policy owners at the time of application for a life settlement, and at the signing of the contract.
5) Requires the Insurance Commissioner to review the examination for the licensing of life insurance agents and recommend any changes to the examination to the department’s curriculum committee.
6) Requires brokers and producers to complete at least 15 hours of continuing education related to life settlements and life settlement transactions.
SB 1224 will not apply to any life settlement contract entered into on or before December 31, 2008.
